Question In need of advice

[helpme123]

Hello,

I'm in need some advice on my current situation.

Current CC Debt 70K
1st Mortgage - 528K
2nd Mortgage 156K
Current Market value of house 475K
Monthly Net Income = 3800
Roommate income = 1600

I'm currently employed (thank god!) and had to start living off of credit cards since I broke up with my Fiance in 06 (had to subsidize my income). Since 07 I got roommates so that has stopped the CC usage.

To make a long story short, as you can see my house is upside down and I have a lot of debt. I'm afraid to file 13 or 7 since my credit is perfect now. I have not been late on any payments.

My issue is since my house is upside down and I don't want to live with roommates for the rest of my life so would it make sense to BK and hopefully strip the 2nd mortgage and get rid of all the CC debt. This way I don't have to live pay check paycheck. I'm already in the process of modifying my 1st mortgage so the payment is reasonable.

[JRScott]

You'd have to file a chapter 13 to lien strip the second loan. That means you'd have to have enough disposeable income to qualify.

[NewLifeAhead]

Helpme... Welcome to the forum. Spend some time on here reading through the threads and you will learn valuable information.

Your debt load is similar to mine (mine slightly higher in all 3 debts) so I know the size of your mortgage payments are significant and I understand your pain about living paycheck to paycheck. I am also upside down in the house. We have filed ch 7 and are giving up the house to start over.

If you do decide to file, make sure your modification on the first mortgage is permanent before you file. If you file chapter 13 to strip the 2nd mortgage, please be aware that you will have a 3 or 5 year payment plan (disposable income) where these funds get distributed to your unsecured creditors by the Trustee. Once this payment plan is complete, you will then receive your discharge.

Of course, your calculated payment plan of disposable income could be a small amount and you could easily handle it with your modified mortgage payment. But, just look at all the options of what makes sense for you (filing ch 7 or 13) before you decide one way or the other.

One thing to consider is when you said: " I'm already in the process of modifying my 1st mortgage so the payment is reasonable." When modifications are done, a great percentage (60%) of these mortgages go back into foreclosure as the debtors still cannot sustain the payments as life circumstances always change.

Please don't think I'm saying ch 7 is the way, I just want you to consider all the options and you have to determine what's best for you.

Please keep us up to date on what you decide and there are many folks on here that can give you great information.

Good luck to you.

[OhioFiler]

I'd plan on filing a C7. My FICO score isn't worth $270,000 (approx. the amount of unsecured debt you have).

I would stop paying all CC's and both mortgages, stay in the house as long as possible collecting roommate rents. In a year or so you'd probably be able to save $60,000 and be debt free.

[frogger]

You're $209,000.00 upside down on the house according to your numbers. Don't look for this to get any better anytime soon. The fat lady hasn't even started warming up to sing as far as the housing market is concerned. Between that, and your unsecured debt, my opinion is for you to enjoy the personal bailout sponsored by the US Government known as Chapter 7.

Read the stickeys, ask the questions, and good luck to you.